How good is Comcast Corp.’s bid for 21st Century Fox Inc.? Nothing Walt Disney Co. can’t handle.
Now that AT&T Inc. has been cleared to buy Time Warner Inc., Comcast and Disney have each been emboldened to do their own momentous transaction. The problem is they want the same one. With Time Warner off the block, the Murdochs just so happen to have the last big bundle of TV and film assets for the taking.
After the close of trading Wednesday, Comcast kicked off round one of a potential bidding war, offering $35 a share in cash for the set of assets Fox’s board had already planned to sell to Disney. Quick refresher: A deal with either party would involve the buyer taking on Fox’s cable networks, international stakes, regional sports networks and film studio, while the Fox News and national sports networks—the Murdochs’ crown jewels—would get spun off and remain under the family’s control.
The $35-a-share bid equates to $65 billion in total (not counting any assumed debt) and compares with Disney’s $52.4 billion offer. But Comcast’s cash offer is only worth that much today if you are confident that the judge’s ruling in the AT&T case on Tuesday applies to Comcast. More on that later, but for now, let’s say a deal with Comcast takes a year to close, which would still be relatively quick considering the size of the transaction. Some back-of-the-envelope math shows that the bid is really worth $31 and change, using a Bloomberg-calculated required return for Fox shares.
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